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Apple’s decision to repatriate US$250B and pay a 15 per cent US$34B tax bill over five years is clearly a vindication of Trump’s pro-business stance. U.S. companies hold as much as US$1.5T offshore and it is anticipated that many firms will follow Apple’s lead. As reported in the Globe and Mail last week, as a result of Trump’s overhaul of the tax system reducing corporate tax to 21 percent from 35 per cent, companies such as Wal-Mart and Target are increasing wages for hourly paid employees, as are Wells Fargo, AT&T and Boeing. Wal-Mart alone has 1.5 million employees in the U.S., while overall U.S. unemployment is at a 17 year low. So despite stretched valuations for U.S. stock prices, continued economic growth should result in company earnings aligning with their valuations.
In Canada regrettably, business is being confronted by the mantra of ‘progressive’ policies on trade and corporate governance. The Trudeau government entered NAFTA negotiations with a ‘progressive’ agenda, including climate change, indigenous rights, gender diversity and pro-union demands to end ‘right to work’ states, none of which should have anything to do with trade negotiations. Not surprisingly, the U.S. Trump administration was not interested, nor were interested, in China and Japan. Trying to shove a social engineering agenda down the throats of our trading partners is a non-starter. I was encouraged to hear, however, that the adults had returned to the NAFTA table and serious compromises were being sought.
This week, however, International Trade Minister Champagne announced that there would be a new ombudsman/watchdog to oversee ‘bad corporate behaviour’ abroad, particularly with respect to mining and human rights abuses as part of protecting ‘Canada’s brand.’
Newly introduced Bill 25 is another attempt to force corporations to commit to a ‘progressive ‘agenda. Minister of Innovation and Economic Development Navdeep Bains’ proposal is that corporations have annual elections of directors in order to speed up ‘diversity’ among board members.
The government seems to have ignored the fundamental purpose of corporations which is to enhance shareholder value, not government social programs. These proposals will result in yet another feeding frenzy for lawyers and greater regulation for business.
The Canadian Brand could well end up meaning “closed for investment.”
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